A Bare Floor on Stemmons Freeway
One conference event was on the 12th floor of Pegasus Park, on Stemmons Freeway in Dallas. The tower was built around 1970 as the headquarters of the Zale Corporation, the jewelry company behind Zales. It later sat nearly empty for more than a decade. In 2015, J. Small Investments bought the property and, with Lyda Hill Philanthropies, redeveloped it into a biotech and nonprofit campus of roughly 750,000 square feet. UT Southwestern is one of its tenants.
The 12th floor was unfinished: a bare concrete shell of about 35,000 square feet, a stage and seating on one side, open space everywhere else. I thought about the vacant space in our own building in Sioux Falls.
That was comforting. I speak that language. It was also unsettling. Dallas faces many of the same challenges we do, magnified in a far more competitive market. If a campus with Pegasus Park’s history and partners still has raw floors to fill, nobody gets a shortcut.
Programming Pulls People In
My biggest takeaway was simple: programming is what pulls people into a building.
Foot-traffic metrics count who walks through the door. They don’t give anyone a reason to come. A concrete shell became a gathering place because there was something worth showing up for.
We should track people more broadly than event attendance. Who comes back? Who brings a colleague next time? Attendance tells us about one day. The broader picture tells us whether a building is becoming a place people want to be.
Count, Concentration, Cost
The closing panel boiled site selection down to three questions. How much talent is there? How concentrated is it? And what does it cost? Companies want to know where they can find really good talent at a competitive price.
Count, concentration and cost. Three C’s.
That framing explained why so many companies are choosing Texas. The state has strong institutions and strong talent, and hiring a few hundred people there costs far less than it would in San Diego, Boston, San Francisco or Seattle. What surprised me was the point made right after: the draw is not the taxes. It’s the talent and what it costs to hire it.
The 3-30-300 Rule
Then came a rule of thumb. If a company is spending $3 on utilities, it is usually spending $30 on rent and $300 on personnel. The utilities barely matter. The rent barely matters. It’s the people.
I’ve started calling it the 3-30-300 rule. It brings me right back to that advice about hiring. People are the biggest investment a company makes. The places that help companies find great people, and keep them, will win.
The panel added that a community has to serve more than one need. People want a place where they can work, live and succeed, not just a place to clock in.
That is the kind of community we are trying to build in Sioux Falls.
Universities Hold the Keys
Concentration is where research parks like ours earn their place. The panel pointed to the top 25 university-anchored innovation districts in the country. Over 10 years, those districts have consistently run about 5 percentage points lower vacancy, and they command rent premiums of 10 to 50 percent.
The reason is straightforward: companies are chasing talent, and universities are the gatekeepers to it.
That is why the USD Discovery District exists as a university research park and not just another office park. The anchor matters. Our job is to make the connection between the university and the companies around it as short and easy as possible.
Not Boston, and That’s Okay
Dallas promoted Texas as the alternative to California and Boston. The same logic applies to South Dakota.
One line from the conference stuck with me because it could have been written for us: we are not Boston, and that’s okay. We are not the Bay Area, and we’re not trying to be.
We don’t need to win by imitation. The advice in the room was practical: find your lane, pick it and aim to be one of the best two or three in it. We can be clear about what we offer, honest about who it fits and very good at serving those companies.
What It Costs to Build a Lab
Cost is the third C, so I paid close attention to tenant improvement (TI) costs. Architecture and engineering folks from New York and Florida described roughly $300 per square foot as reasonable. Full lab build-outs elsewhere run $500 to $600 per square foot.
My own estimate: a full highly specialized lab build-out in Sioux Falls probably lands around $400 to $500 per square foot. Basic labs can be built efficiently.
This reinforces the runway model we talk about at the USD Discovery District. When a startup spends less to build and operate, its cash goes further in South Dakota. More runway means more time to reach the next milestone and to hire the great people it needs. By the 3-30-300 rule, the bigger win is what those savings let a company spend on people.
Build the Whole Path
The panel talked about building space for every stage of a company, from incubator space to graduation space to pilot line manufacturing.
A startup that begins at a single bench will eventually need its own lab. A company that proves its product will eventually need to make it. If the next space doesn’t exist here, the company leaves to find it and takes its people with it. Every stage we can offer in Sioux Falls is one less reason to go.
Invest in Talent, Invest in Power
When the conversation turned to where regions should invest, the answer I kept hearing in Dallas was short: invest in your talent, invest in your power. People in the room put the second half even more bluntly. Power is the new oil.
Talent brings companies to a region. Power determines whether they can operate there.
The panel also urged regions to proactively educate elected officials. The people deciding on workforce, energy and infrastructure should understand what this industry needs and why it matters to the state.
Come Build It With Us
Nobody gets a shortcut. What we have is a university anchor, a competitive cost to build and operate, and a city where people can work, live and succeed. The rest is work, and we want partners in it.
If your company is weighing where to grow, visit the USD Discovery District in Sioux Falls. If you run programs or events, bring them here and help fill our floors with something worth showing up for. If you work on talent, power or policy in South Dakota, partner with us.